Llanelli Scarlets are considering legal action against the assembly government, a director of the club has revealed.
People living near Stradey have protested at the new homes plan
The move follows the assembly government's decision to call in the club's plans to sell its Stradey Park stadium in Llanelli for housing.
The Scarlets have warned the rugby club faces closure without planning approval or a new source of funds soon.
The assembly government said it was up to the Scarlets to make a case for the development to a planning inspector.
Scarlets director Ron Jones told BBC Wales' Taro Naw programme that the club was considering legal action because they felt the assembly government had acted inappropriately.
The club wants to build 450 houses on the Stradey Park site.
Local residents argue the plans contravene planning regulations as the majority of the area is listed as a flood plain by the Environment Agency.
But Mr Jones said the agency's latest advice to the council was that floods could be managed on the site.
He said that the agency's objection to the scheme was purely technical as the site had been listed as a C2 flood plain.
In September, the club circulated leaflets to locals claiming maps designating Stradey Park as a flood risk were "not accurate".
The assembly government said: "The assembly maps are based on specialist Environment Agency advice. They are neither wrong nor out of date.
"The Environment Agency objected to the proposed development. It is now for the Scarlets and their advisors to make the case for the development and set the arguments before a planning inspector."
Taro Naw is produced by BBC Wales on S4C on Tuesday at 2025 BST.